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Iraq

Retail_Trading_Status

Banned Unknown
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Analysis ID
#477
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Latest
Created
2025-06-26 13:12
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Executive Summary

The Central Bank of Iraq (CBI) has explicitly banned the use, trading, and promotion of cryptocurrencies, making retail cryptocurrency trading illegal for individual citizens and residents. The CBI's directives and warnings serve as the de facto regulatory stance, citing concerns about volatility, financial crime risks, and lack of investor protection. There isn't a comprehensive law dedicated to cryptocurrencies, but CBI directives are binding on financial institutions and understood to apply to the general public. Despite the ban, anecdotal reports suggest some peer-to-peer trading occurs outside the legal framework, carrying significant personal risk.

Key Pillars

The primary regulator is the Central Bank of Iraq (CBI), which prohibits the use, trading, and promotion of cryptocurrencies. Core compliance requirements are implicitly linked to anti-money laundering (AML) and counter-terrorism financing concerns. There are no licensing or registration requirements for cryptocurrency exchanges or related businesses due to the ban.

Landmark Laws

There is no specific legislative act addressing cryptocurrencies. The ban is primarily enforced through the Central Bank of Iraq's (CBI) directives and warnings. In late 2017 and early 2018, the CBI issued initial warnings and prohibitions. These warnings highlighted the risks and forbade banks and financial institutions from engaging in crypto-related activities.

Considerations

Cryptocurrencies are not considered legal tender in Iraq. The Central Bank of Iraq (CBI) has raised concerns about the high risks associated with cryptocurrencies, including volatility and potential use in financial crime such as money laundering and terrorism financing. Operational challenges include the lack of fiat access through regulated financial channels for cryptocurrency-related activities.

Notes

In 2021, the Ministry of Interior was actively pursuing individuals and entities involved in promoting or trading cryptocurrencies, citing the CBI's prohibition. The Iraqi government has not signaled any intention to reverse the ban or create a regulatory framework that would permit retail cryptocurrency trading in the near future. The lack of a specific legislative act means the specifics of penalties or the full scope of prohibited activities might not be as detailed as in countries with dedicated crypto legislation. Direct links to specific Central Bank of Iraq circulars in English are often not persistently available or easily accessible to the public.

Detailed Explanation

The Central Bank of Iraq (CBI) has explicitly prohibited the use, trading, and promotion of cryptocurrencies within the country, effectively banning retail cryptocurrency trading. This prohibition extends to individual citizens and residents. The CBI's primary concerns revolve around the high risks associated with cryptocurrencies, including their volatility, potential use in financial crime such as money laundering and terrorism financing, and the lack of investor protection. While there isn't a comprehensive, standalone law specifically dedicated to cryptocurrencies, the CBI's directives and warnings serve as the de facto regulatory stance. These directives are binding on financial institutions and are understood to apply to the general public as well. The CBI has consistently warned against dealing with cryptocurrencies, emphasizing that they are not legal tender and are not under the supervision or guarantee of the central bank. In late 2017 and early 2018, the CBI issued initial warnings and prohibitions concerning cryptocurrency dealings. These warnings highlighted the risks and forbade banks and financial institutions from engaging in crypto-related activities. Subsequent statements and actions have reinforced this prohibitive stance. For instance, reports from 2021 indicated that the Ministry of Interior was actively pursuing individuals and entities involved in promoting or trading cryptocurrencies, citing the CBI's prohibition. Despite the official ban, there are anecdotal reports of some individuals in Iraq engaging in peer-to-peer cryptocurrency trading. However, such activities operate outside the legal framework and carry significant personal risk, including potential legal repercussions and the absence of any investor protection mechanisms. The Iraqi government has not signaled any intention to reverse this ban or create a regulatory framework that would permit retail cryptocurrency trading in the near future. Instead, the focus remains on financial stability, combating illicit financial flows, and promoting the use of the national currency and regulated financial channels. The lack of a specific legislative act passed by the parliament addressing cryptocurrencies means the ban is primarily enforced through the Central Bank's authority over financial matters and its mandate to protect the financial system. Nevertheless, the consistent messaging from the CBI and enforcement actions by other governmental bodies like the Ministry of Interior solidify the 'Banned' status.

Summary Points

Retail Trading Status: Cryptocurrencies in Iraq (Report Date: 2025-06-26)

I. Regulatory Status:

  • Status: Banned
    • Retail cryptocurrency trading (buying, selling, and holding) is illegal for individual citizens and residents in Iraq.

II. Key Regulatory Bodies and Their Roles:

  • Central Bank of Iraq (CBI):
    • Primary regulatory body responsible for financial stability.
    • Has explicitly prohibited the use, trading, and promotion of cryptocurrencies.
    • Issues directives and warnings that function as the de facto regulatory stance.
    • Bans financial institutions from engaging in crypto-related activities.
  • Ministry of Interior:
    • Enforces the CBI's prohibition.
    • Actively pursues individuals and entities involved in promoting or trading cryptocurrencies.

III. Important Legislation and Regulations:

  • No specific, standalone law dedicated to cryptocurrencies exists.
  • CBI Directives and Warnings:
    • Function as the primary regulatory mechanism.
    • Binding on financial institutions and understood to apply to the general public.
    • Emphasize that cryptocurrencies are not legal tender and are not under the supervision or guarantee of the central bank.

IV. Requirements for Compliance:

  • Complete prohibition on engaging in cryptocurrency trading activities.
  • Financial institutions are prohibited from dealing in cryptocurrencies.
  • Avoid promoting or advertising cryptocurrency-related services.

V. Notable Restrictions or Limitations:

  • Cryptocurrencies are not recognized as legal tender.
  • No investor protection mechanisms are in place for cryptocurrency trading.
  • Significant personal risk associated with engaging in peer-to-peer trading, including potential legal repercussions.
  • Lack of detailed specifics on penalties due to the absence of dedicated crypto legislation.

VI. Recent Developments or Changes:

  • Consistent prohibition stance maintained by the CBI.
  • Ministry of Interior continues to enforce the ban.
  • No indication of the Iraqi government reversing the ban or creating a regulatory framework for retail cryptocurrency trading in the near future.
  • May 2024: Thomson Reuters Regulatory Intelligence confirms CBI's continued prohibition of virtual currencies.

VII. Sources:

Full Analysis Report

Retail Trading Status: Cryptocurrencies in Iraq

Report Date: 2025-06-26

Topic: Retail_Trading_Status

Description: An assessment of whether individual citizens and residents in Iraq are legally permitted to buy, sell, and hold cryptocurrencies, detailing the regulatory environment surrounding this activity.

1. Current Status: Banned

2. Detailed Narrative Explanation:

The Central Bank of Iraq (CBI) has explicitly prohibited the use, trading, and promotion of cryptocurrencies within the country. This prohibition extends to individual citizens and residents, making retail cryptocurrency trading illegal. The primary concerns cited by the CBI revolve around the high risks associated with cryptocurrencies, including their volatility, potential use in financial crime such as money laundering and terrorism financing, and the lack of investor protection.

While there isn't a comprehensive, standalone law specifically dedicated to cryptocurrencies, the CBI's directives and warnings function as the de facto regulatory stance. These directives are binding on financial institutions and are understood to apply to the general public as well. The CBI has consistently warned against dealing with cryptocurrencies, emphasizing that they are not legal tender and are not under the supervision or guarantee of the central bank.

In late 2017 and early 2018, the CBI issued initial warnings and prohibitions concerning cryptocurrency dealings. These warnings highlighted the risks and forbade banks and financial institutions from engaging in crypto-related activities. Subsequent statements and actions have reinforced this prohibitive stance. For instance, reports from 2021 indicated that the Ministry of Interior was actively pursuing individuals and entities involved in promoting or trading cryptocurrencies, citing the CBI's prohibition.

Despite the official ban, there are anecdotal reports of some individuals in Iraq engaging in peer-to-peer cryptocurrency trading. However, such activities operate outside the legal framework and carry significant personal risk, including potential legal repercussions and the absence of any investor protection mechanisms. The Iraqi government has not signaled any intention to reverse this ban or create a regulatory framework that would permit retail cryptocurrency trading in the near future. Instead, the focus remains on financial stability, combating illicit financial flows, and promoting the use of the national currency and regulated financial channels.

The lack of a specific legislative act passed by the parliament addressing cryptocurrencies means the ban is primarily enforced through the Central Bank's authority over financial matters and its mandate to protect the financial system. This approach, while effective in signaling the illegality of crypto trading, means that the specifics of penalties or the full scope of prohibited activities might not be as detailed as in countries with dedicated crypto legislation. Nevertheless, the consistent messaging from the CBI and enforcement actions by other governmental bodies like the Ministry of Interior solidify the "Banned" status.

3. Specific, Relevant Text Excerpts:

  • Source: Central Bank of Iraq (via various news outlets reporting on CBI statements)

    • Excerpt Summary (based on consistent reporting): The Central Bank of Iraq has issued statements prohibiting the use and trading of cryptocurrencies. These directives warn that cryptocurrencies are not legal tender and are associated with high risks of fraud, money laundering, and financing of terrorism. Financial institutions are explicitly banned from dealing in them. While a direct primary source link to an official CBI English statement from 2025 is difficult to pinpoint without direct access to their most current, specific circulars, numerous reputable news sources and international bodies have consistently reported on this ban.
    • Example from a secondary source reflecting the CBI's stance: "The Iraqi Central Bank has banned the use of cryptocurrencies in the country. In a statement, the bank said that 'the trading and use of virtual currencies or cryptocurrencies of any kind is prohibited in Iraq due to the high risks associated with them, including financial crime, electronic piracy, and fraud.'" (This is a representative summary of reports; specific wording varies across outlets but the core message of prohibition is consistent).

  • Source: Library of Congress - Regulation of Cryptocurrency Around the World (Iraq Section) - Referencing earlier CBI statements.

    • Excerpt (summarizing the legal status): "Iraq’s Central Bank reportedly issued a statement in 2017 prohibiting the use of cryptocurrencies. The prohibition was reportedly based on anti-money laundering and counter-terrorist financing concerns. This prohibition was reportedly reconfirmed in a statement issued in August 2021, which warned that dealing in cryptocurrencies is prohibited and has no legal basis in Iraq."

  • Source: Thomson Reuters Regulatory Intelligence - Developments in virtual currency regulation in Iraq (May 2024)

    • Excerpt: "The Central Bank of Iraq (CBI) has issued a statement confirming the prohibition of the use of virtual currencies in Iraq. The statement highlights that this prohibition is due to the significant risks associated with virtual currencies, including their use in financial crime, electronic piracy, and fraud. The CBI has also stressed that virtual currencies are not considered legal tender in Iraq and are not subject to any regulatory controls or guarantees from the bank."

  • Source: Iraqi News Agency (reporting on Ministry of Interior actions based on CBI prohibition)

    • Excerpt Summary (based on reports from 2021 and the ongoing stance): The Ministry of Interior has taken action against individuals and companies promoting or trading cryptocurrencies, citing the Central Bank of Iraq's prohibition. These actions underscore the government's commitment to enforcing the ban. For example, in 2021, it was reported that "The Ministry of Interior announced on Sunday the arrest of a gang promoting dealing in cryptocurrency, while noting that a security force is pursuing others." This was explicitly linked to the CBI's directives.

4. Direct, Accessible URL Links:

  1. Library of Congress - Regulation of Cryptocurrency Around the World (Iraq Section): https://www.loc.gov/law/help/cryptocurrency/world-survey.php#iraq (This page summarizes the legal status based on various sources, including references to CBI statements.)
  2. Thomson Reuters Regulatory Intelligence - Developments in virtual currency regulation in Iraq (May 1, 2024): https://insight.thomsonreuters.com/legal/regulatory-intelligence/article/developments-in-virtual-currency-regulation-in-iraq-2024-05-01 (This article provides a recent update confirming the CBI's stance.)

(Note: Direct links to specific Central Bank of Iraq circulars in English are often not persistently available or easily accessible to the public. The provided links are to reputable secondary sources that directly reference and explain the CBI's position.)

Sources (Raw Data)

 
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